Capital One cuts 1,900 jobs, shuts mortgage origination arm

Capital One Financial Corp. said Monday it will cut 1,900 jobs and shutter its wholesale mortgage banking business, a move that comes as lenders continue to struggle in the nation’s housing and mortgage markets.

Capital One said it will shut down GreenPoint Mortgage and eliminate most of the jobs by the end of year. The company will “cease residential mortgage origination” effective immediately and close GreenPoint’s Novato, Calif., headquarters and 31 locations in 19 states.

The company said it will honor commitments to customers with locked rates who have loans already in the pipeline.

“Over the past few months, we have experienced an unprecedented disruption in the secondary mortgage markets,” Capital One Chairman and Chief Executive Officer Richard D. Fairbank wrote in an internal memo to employees

GreenPoint specializes in no-documentation and Alt-A mortgage loans for borrowers with slightly better credit than subprime borrowers. In his memo, Fairbank said that market has seen a “significant reduction in liquidity and continuing volatility.”

The decision to close GreenPoint will hit McLean, Va.-based Capital One with an $860 million charge, or $2.15 per share, the vast majority of which will come in 2007. Capital One lowered its 2007 earnings guidance by 14 percent to $5 per share.

•Lowe’s Cos., the nation’s second largest home improvement chain, cited customer service and efficient operations Monday as reasons for a better-than-expected 9 percent rise in its second-quarter profit.

Still, decreasing sales at stores open at least a year, worsening trends in the housing market and uncertainty over credit quality led the Mooresville, N.C.-based retailer to trim its earnings outlook for the full year.

•Tribune Co.’s stock jumped 5 percent Monday on the eve of a shareholder meeting on the $8.2 billion deal to take the media conglomerate private, but an expected “yes” vote won’t erase the questions still surrounding the transaction.

Standard & Poor’s underscored concerns by cutting its rating on the company’s debt, citing a deterioration in operating performance and cash flow since the deal was announced nearly five months ago.

Approval by shareholders is considered a foregone conclusion, since they will be voting to accept $34 per share when the going price is 20.5 percent below that.